Oil prices have surged sharply, with oil prices rising above $120 per barrel, as fears grow over prolonged supply disruptions linked to a potential extended United States blockade of Iran.
The global benchmark Brent crude climbed above $120 on Wednesday, briefly reaching $122, its highest level since 2022. The rise reflects mounting concern over constrained supply routes, particularly through the Strait of Hormuz, a critical maritime corridor that carries around one-fifth of the world’s oil and liquefied natural gas.
The increase follows reports that United States President Donald Trump has instructed officials to prepare for an extended blockade of Iranian ports. The move is aimed at restricting Iran’s oil exports and applying economic pressure amid stalled negotiations over its nuclear programme.
Energy executives, including Chevron chief executive Mike Wirth, met Donald Trump at the White House on Tuesday to discuss the potential impact of the conflict on domestic energy markets and consumers. According to a White House official, discussions covered domestic production, oil futures, natural gas supply, shipping routes and developments in Venezuela. Officials described the meeting as part of regular consultations with industry leaders.
Market participants interpreted the meeting as a signal that disruption to the Strait of Hormuz could persist. Iran has restricted shipping through the route in response to United States and Israeli strikes that began on 28 February, warning that vessels approaching the strait could be targeted.
In turn, the United States said its forces would intercept or turn back vessels travelling to or from Iranian ports. Analysis by BBC Verify indicates that at least four vessels departing Iranian ports have crossed the US blockade line.
The conflict has led to significant volatility in oil markets. Although Brent crude briefly fell to $90 per barrel on 17 April following a ceasefire announcement between Israel and Lebanon and a pause in US attacks on Iran on 8 April, prices have risen steadily over the past 12 days as the blockade continued.
The disruption has heightened concerns over fuel supply security, with risks extending to petrol, diesel and broader energy costs. Lindsay James, investment strategist at Quilter, said that while the immediate impact in the United Kingdom has been higher fuel prices, “every day that passes without a resumption of supply sees the risk of physical shortages and steeper price rises on a range of goods increasing”.
Iran’s economy is also under increasing strain. According to the Statistical Center of Iran, inflation has reached 53.7%, while the national currency, the rial, has fallen to a record low. The government has said around two million people have lost jobs directly or indirectly due to the conflict.
Despite the pressure, Iranian officials said the country could withstand the blockade by using alternative trade routes to sustain exports.
The World Bank has warned that energy prices could rise by 24% in 2026, potentially reaching their highest levels since Russia’s full-scale invasion of Ukraine, if supply disruptions linked to the Iran conflict persist beyond May.
Financial markets have responded to the uncertainty. European stocks declined on Wednesday, with the FTSE 100 falling 1.2%, France’s CAC 40 down 0.39%, and Germany’s DAX slipping 0.27%. In the United States, the S&P 500 closed flat, while Asian markets showed modest gains as they continued to recover from earlier shocks.
Kathleen Brooks, research director at XTB, said markets are adjusting to the likelihood of prolonged disruption. “Financial markets will now need to price in the prospect of a prolonged blockade,” she said.
In a post on Truth Social, Donald Trump urged Iran to “get smart soon” and agree to a deal, saying the country “couldn’t get its act together”, as diplomatic efforts to resolve the conflict remain deadlocked.
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